Goldman Sachs BDC Inc

Previous wording

We are a specialty finance company focused on lending to middle-market companies. We are a closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, we have elected to be treated as a regulated investment company (“RIC”), and we expect to qualify annually for tax treatment as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2013. From our formation in 2012 through March 31, 2024, we originated approximately $7.69 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits and repayments. We seek to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche debt, including last-out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

Current wording

We are a specialty finance company focused on lending to middle-market companies. We are a closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, we have elected to be treated as a regulated investment company (“RIC”), and we expect to qualify annually for tax treatment as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2013. From our formation in 2012 through June 30, 2024, we originated approximately $8.13 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits and repayments. We seek to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche debt, including last-out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

Previous wording

As of March 31, 2024, the total portfolio weighted average yield measured at amortized cost and fair value was 11.9% and 13.6%, as compared to 11.8% and 13.2% as of December 31, 2023. Within Second Lien/Senior Secured Debt, the increase in weighted average yield at cost and fair value was primarily driven by the restoration of MPI Engineered Technologies, LLC to accrual status. Within Unsecured Debt, the increase in weighted average yield at cost and fair value was primarily driven by the exit fees and the underperformance of Wine.com.

Current wording

As of June 30, 2024, the total portfolio weighted average yield measured at amortized cost and fair value was 11.0% and 12.6%, as compared to 11.8% and 13.2% as of December 31, 2023. Within Second Lien/Senior Secured Debt, the increase in weighted average yield at cost and fair value was primarily driven by the restoration of MPI Engineered Technologies, LLC to accrual status. Within Unsecured Debt, the decrease in weighted average yield at cost and increase in fair value was primarily driven by the underperformance of Wine.com.

Previous wording

Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount. As of March 31, 2024 and December 31, 2023, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 39.9% and 42.9% of total debt investments.

Current wording

Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount. As of June 30, 2024 and December 31, 2023, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 27.8% and 42.9% of total debt investments.

Previous wording

The decrease in investments with a grade 1 investment performance rating was driven by the exit of investments with an aggregate fair value of $46.81 million, and was partially offset by investments with an aggregate fair value of $27.68 million being upgraded from grade 2 investment performance ratings to grade 1 investments performance ratings due to potential exits. The increase in investments with a grade 3 investment performance rating was primarily driven by investments with an aggregate fair value of $71.29 million being downgraded from grade 2 investment performance ratings due to financial underperformance and by an investment with a fair value of $16.95 million being upgraded from a grade 4 investment performance rating due to financial improvements, and was partially offset by the exit of investments with an aggregate fair value of $36.49 million.

Current wording

The increase in investments with a grade 1 investment performance rating was driven by investments with an aggregate fair value of $58.44 million being upgraded from grade 2 investment performance rating to grade 1 investment performance rating due to potential exits, partially offset by the exit of investments with an aggregate fair value of $46.81 million. The decrease in investments with a grade 3 investment performance rating was primarily driven by an investment with a fair value of $49.09 million being downgraded to grade 4 performance rating due to financial underperformance, and an investment with a fair value of $30.01 million being upgraded to grade 2 performance rating due to improved performance. The increase in investments with grade 4 investment performance rating was primarily driven by investments with an aggregate fair value of $86.36 million being downgraded from grade 3 investment performance rating and grade 2 investment performance rating due to underperformance, partially offset by investments with an aggregate fair value of $41.83 million being upgraded to grade 3 investment rating due to improved performance and restructuring.

Previous wording

Interest income from investments decreased from $98.64 million for the three months ended March 31, 2023 to $97.57 million for the three months ended March 31, 2024, primarily driven by the increase in the number of investments moving from cash only payments of interest to both cash and PIK payments of interest, which includes the impact of restructuring of certain investments. Additionally, the decrease in interest income was also due to a decrease in the size of our portfolio. The amortized cost of our portfolio decreased from $3,681.51 million as of March 31, 2023 to $3,602.65 million as of March 31, 2024. Included in interest income is accelerated accretion of upfront loan origination fees and unamortized discounts of $0.22 million for the three months ended March 31, 2023 and $2.14 million for the three months ended March 31, 2024.

Current wording

Interest income from investments decreased from $201.12 million for the six months ended June 30, 2023 to $192.76 million for the six months ended June 30, 2024, primarily driven by the increase in the number of investments moving from cash only payments of interest to both cash and PIK payments of interest. Included in interest income is accelerated accretion of upfront loan origination fees and unamortized discounts of $0.61 million for the six months ended June 30, 2023, and $4.93 million for the six months ended June 30, 2024.

Previous wording

PIK income from investments increased from $7.76 million for the three months ended March 31, 2023 to $12.70 million for the three months ended March 31, 2024. The increase was due to the increase in the number of investments earning PIK income, which includes the impact of restructuring of certain investments.

Current wording

PIK income from investments increased from $8.79 million and $16.55 million for the three and six months ended June 30, 2023 to $11.86 million and $24.56 million for the three and six months ended June 30, 2024. The increase was due to the increase in the number of investments earning PIK income, which includes the impact of restructuring of certain investments.

Previous wording

Incentive fees decreased from $22.30 million for the three months ended March 31, 2023 to $10.88 million for the three months ended March 31, 2024. The decrease is driven by the performance of the investment portfolio for the twelve quarters ended March 31, 2024 as compared to the twelve quarters ended March 31, 2023. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Current wording

Incentive fees decreased from $7.84 million and $30.14 million for the three and six months ended June 30, 2023 to $0 million and $10.88 million for the three and six months ended June 30, 2024. The decrease was driven by the performance of the investment portfolio for the twelve quarters ended June 30, 2024 as compared to the twelve quarters ended June 30, 2023. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Previous wording

For the three months ended March 31, 2023, our Investment Adviser voluntarily waived incentive fees by $1.99 million. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Current wording

For the three and six months ended June 30, 2023, our Investment Adviser voluntarily waived incentive fees of $0 million and $1.99 million. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Previous wording

For the three months ended March 31, 2024, net realized losses were primarily driven by the restructuring of the first lien debt investments in Sweep Purchaser LLC which resulted in a realized loss of $17.49 million.

Current wording

For the six months ended June 30, 2024, net realized losses were primarily driven by our investments in two portfolio companies. In June 2024, the restructuring of the first lien debt investments in Thrasio, LLC resulted in a realized loss of $26.51 million. In addition, in March 2024, the restructuring of the first lien debt investments in Sweep Purchaser LLC resulted in a realized loss of $17.49 million.

Previous wording

For the three months ended March 31, 2023, net realized losses were driven by the exit of our investments in one portfolio company. In February 2023, we fully exited our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC, which resulted in a realized loss of $36.27 million.

Current wording

For the six months ended June 30, 2023, net realized losses were primarily driven by the exit of our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC, which resulted in a realized loss of $36.27 million.

Previous wording

For the three months ended March 31, 2024, Other, net includes gross unrealized appreciation of $11.53 million and gross unrealized depreciation of $(5.47) million.

Current wording

For the three and six months ended June 30, 2024, Other, net includes gross unrealized appreciation of $13.54 million and $27.13 million, and gross unrealized depreciation of $(12.69) million and $(17.54) million.

Previous wording

Net change in unrealized appreciation (depreciation) in our investments for the three months ended March 31, 2024 was primarily driven by the financial underperformance of Wine.com, Inc., Thrasio, LLC and Pluralsight, Inc., and was partially offset by the reversal of unrealized depreciation in connection with the aforementioned restructuring of the first lien debt investments in Sweep Purchaser LLC and tightening credit spreads.

Current wording

Net change in unrealized appreciation (depreciation) in our investments for the six months ended June 30, 2024 was primarily driven by the financial underperformance of Lithium Technologies, Inc, Pluralsight, Inc, Zodiac Intermediate, LLC (dba Zipari) and Wine.com, Inc., and was partially offset by the reversal of unrealized depreciation in connection with the aforementioned restructuring of the first lien debt investments in Thrasio, LLC and Sweep Purchaser LLC.

Previous wording

For the three months ended March 31, 2023, Other, net includes gross unrealized appreciation of $3.88 million and gross unrealized depreciation of $(14.93) million.

Current wording

For the three and six months ended June 30, 2023, Other, net includes gross unrealized appreciation of $10.46 million and $10.83 million, and gross unrealized depreciation of $(6.08) million and $(12.87) million.

Previous wording

Net change in unrealized appreciation (depreciation) in our investments for the three months ended March 31, 2023 was primarily driven by the reversal of unrealized depreciation in connection with the aforementioned exit of our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC, and was partially offset by the unrealized depreciation resulting from the increase in market volatility and widening credit spreads.

Current wording

Net change in unrealized appreciation (depreciation) in our investments for the six months ended June 30, 2023 was primarily driven by the reversal of unrealized depreciation in connection with the aforementioned exit of our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC, partially offset by the unrealized depreciation resulting from the increase in market volatility.

Previous wording

We expect to generate cash primarily from the net proceeds of any future offerings of securities, future borrowings and cash flows from operations. To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board of Directors otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into credit facilities in addition to our existing credit facilities, as discussed below, or issue other senior securities. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, is at least 150% after such borrowing (if certain requirements are met). See “—Key Components of Operations—Leverage.” As of March 31, 2024 and December 31, 2023, our asset coverage ratio based on the aggregate amount outstanding of our senior securities was 188% and 187%. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

Current wording

We expect to generate cash primarily from the net proceeds of any future offerings of securities, future borrowings and cash flows from operations. To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board of Directors otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into credit facilities in addition to our existing credit facilities, as discussed below, or issue other senior securities. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, is at least 150% after such borrowing (if certain requirements are met). See “—Key Components of Operations—Leverage.” As of June 30, 2024 and December 31, 2023, our asset coverage ratio based on the aggregate amount outstanding of our senior securities was 181% and 187%. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

Previous wording

We may borrow amounts in USD or certain other permitted currencies. Debt outstanding denominated in currencies other than USD has been converted to USD using the applicable foreign currency exchange rate as of the applicable reporting date. As of March 31, 2024, we had outstanding borrowings denominated in USD of $503.67 million, in Euros (EUR) of 37.70 million, in British Pounds (GBP) of 26.00 million and Canadian Dollar (CAD) of 9.02 million.

Current wording

We may borrow amounts in USD or certain other permitted currencies. Debt outstanding denominated in currencies other than USD has been converted to USD using the applicable foreign currency exchange rate as of the applicable reporting date. As of June 30, 2024, we had outstanding borrowings denominated in USD of $597.67 million, in Euros (EUR) of 0 million, in British Pounds (GBP) of 28.75 million and Canadian Dollars (CAD) of 83.52 million.

Previous wording

Borrowings denominated in USD, including amounts drawn in respect of letters of credit, bear interest (at the Company’s election) of either (i) Term SOFR plus a margin of either (x) 2.00%, (y) 1.875% (subject to maintenance of certain long-term corporate debt ratings) or (z) 1.75% (subject to certain gross borrowing base conditions), in each case, plus an additional 0.10% credit adjustment spread or (ii) an alternative base rate, which is the highest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate for such day plus 1/2 of 1.00% and (iii) the rate per annum equal to (x) the greater of (A) Term SOFR for an interest period of one (1) month and (B) zero plus (y) 1.00%, plus a margin of either (x) 1.00%, (y) 0.875% (subject to maintenance of certain long-term corporate debt ratings) or (z) 0.75% (subject to certain gross borrowing base conditions). Borrowings denominated in non-USD bear interest of the applicable term benchmark rate or daily simple SONIA plus a margin of either 2.00%, 1.875% or 1.75% (subject to the conditions applicable to borrowings denominated in USD that bear interest based on the applicable term benchmark rate or daily simple SONIA) plus, in the case of borrowings denominated in Pound Sterling (GBP) only, an additional 0.1193% credit adjustment spread. With respect to borrowings denominated in USD, we may elect either Term SOFR, or an alternative base rate at the time of borrowing, and such borrowings may be converted from one benchmark to another at any time, subject to certain conditions. Interest is payable in arrears on the applicable interest payment date as specified therein. We pay a fee of 0.375% per annum on committed but undrawn amounts under the Revolving Credit Facility, payable quarterly in arrears. Any amounts borrowed under the Revolving Credit Facility with respect to certain lenders which hold approximately 87% of total lending commitments, will mature, and all accrued and unpaid interest will be due and payable, on October 18, 2028. Any amounts borrowed under the Revolving Credit Facility with respect to remaining lenders will mature, and all accrued and unpaid interest will be due and payable, on May 5, 2027.

Current wording

Borrowings denominated in USD, including amounts drawn in respect of letters of credit, bear interest (at the Company’s election) of either (i) Term SOFR plus a margin of either (x) 2.00%, (y) 1.875% (subject to maintenance of certain long-term corporate debt ratings) or (z) 1.75% (subject to certain gross borrowing base conditions), in each case, plus an additional 0.10% credit adjustment spread or (ii) an alternative base rate, which is the highest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate for such day plus 1/2 of 1.00% and (iii) the rate per annum equal to (x) the greater of (A) Term SOFR for an interest period of one (1) month and (B) zero plus (y) 1.00%, plus a margin of either (x) 1.00%, (y) 0.875% (subject to maintenance of certain long-term corporate debt ratings) or (z) 0.75% (subject to certain gross borrowing base conditions). Borrowings denominated in non-USD bear interest of the applicable term benchmark rate or daily simple SONIA plus a margin of either 2.00%, 1.875% or 1.75% (subject to the conditions applicable to borrowings denominated in USD that bear interest based on the applicable term benchmark rate or daily simple SONIA) plus, (i) in the case of borrowings denominated in Pound Sterling (GBP) only, an additional 0.1193% credit adjustment spread, and (ii) in the case of borrowings denominated in Canadian Dollars only, an additional 0.29547% (one-month interest period) or an additional 0.32138% (three-month interest period) credit adjustment spread. With respect to borrowings denominated in USD, we may elect either Term SOFR, or an alternative base rate at the time of borrowing, and such borrowings may be converted from one benchmark to another at any time, subject to certain conditions. Interest is payable in arrears on the applicable interest payment date as specified therein. We pay a fee of 0.375% per annum on committed but undrawn amounts under the Revolving Credit Facility, payable quarterly in arrears. Any amounts borrowed under the Revolving Credit Facility with respect to certain lenders which hold approximately 87% of total lending commitments, will mature, and all accrued and unpaid interest will be due and payable, on October 18, 2028. Any amounts borrowed under the Revolving Credit Facility with respect to remaining lenders will mature, and all accrued and unpaid interest will be due and payable, on May 5, 2027.